Correlation Between Wah Hong and G Shank

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Can any of the company-specific risk be diversified away by investing in both Wah Hong and G Shank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wah Hong and G Shank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Hong Industrial and G Shank Enterprise Co, you can compare the effects of market volatilities on Wah Hong and G Shank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wah Hong with a short position of G Shank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Hong and G Shank.

Diversification Opportunities for Wah Hong and G Shank

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Wah and 2476 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wah Hong Industrial and G Shank Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Shank Enterprise and Wah Hong is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wah Hong Industrial are associated (or correlated) with G Shank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Shank Enterprise has no effect on the direction of Wah Hong i.e., Wah Hong and G Shank go up and down completely randomly.

Pair Corralation between Wah Hong and G Shank

Assuming the 90 days trading horizon Wah Hong Industrial is expected to under-perform the G Shank. In addition to that, Wah Hong is 1.4 times more volatile than G Shank Enterprise Co. It trades about -0.18 of its total potential returns per unit of risk. G Shank Enterprise Co is currently generating about -0.03 per unit of volatility. If you would invest  8,500  in G Shank Enterprise Co on October 14, 2024 and sell it today you would lose (120.00) from holding G Shank Enterprise Co or give up 1.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Wah Hong Industrial  vs.  G Shank Enterprise Co

 Performance 
       Timeline  
Wah Hong Industrial 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Wah Hong Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wah Hong is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
G Shank Enterprise 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days G Shank Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Wah Hong and G Shank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wah Hong and G Shank

The main advantage of trading using opposite Wah Hong and G Shank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Hong position performs unexpectedly, G Shank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in G Shank will offset losses from the drop in G Shank's long position.
The idea behind Wah Hong Industrial and G Shank Enterprise Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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